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Beginning in late 2015, many people with disabilities and their families will have a new savings tool. On December 19, 2014 President Obama signed P.L. 113-295, which amends certain sections of the Internal Revenue Code of 1986.  Division B of this legislation is enacted to “provide for the tax treatment of ABLE accounts established under State programs for the care of family members with disabilities, and for other purposes.”

Until now, disabled people could have no more than $2000 in savings without risking their eligibility for Social Security Disability, Medicaid and other public benefits. Under the new law, a person with a disability can save up to $14,000 per year, and up to $100,000 total, and retain his or her eligibility for these benefits.

The private savings in an ABLE account are meant to supplement, not supplant public benefits, the beneficiary’s wages and other sources. The savings can be used for qualified disability expenses including education, housing, transportation, employment training and support, assistive technology, personal support services, health care expenses, financial management and administrative services.

The National Down Syndrome Society prepared an informative question and answer treatment of the ABLE Act before its passage. Disability Rights Oregon created a chart to graphically explain the ABLE Act. These explain some of the limits to eligibility for ABLE accounts. For example, you must have become disabled before the age of 26.

The U. S. Treasury has been tasked with writing regulations to implement this legislation during 2015 and the states are to begin accepting applications to open ABLE Accounts by the end of 2015.  ABLE Act Accounts can be used in addition to Special Needs or Pooled Income Trusts.

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